10-16-2022, 10:53 PM
Quote:Social Security Payments Update Coming This Week, and It Could Be Significant
By Jack Phillips
October 10, 2022 Updated: October 10, 2022
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The Social Security Administration is expected to announce its cost-of-living adjustment, or COLA, for Social Security recipients this week—and it could be the largest increase in decades.
Analysts with the Senior Citizens League say the COLA hike will be 8.7 percent to keep pace with year-over-year inflation. Last year, the Social Security Administration announced a 5.9 percent adjustment.
A report (pdf) released by the nonpartisan senior group last month that such an increase “would be the highest ever received by most Social Security beneficiaries alive today.” The official cost-of-living adjustment is usually announced by the Social Security Administration during the month of October.
That calculation is based on the most recent consumer price index data that showed inflation rose 8.3 percent over the past year as of August.
“COLAs are intended to help maintain the buying power of Social Security benefits when prices rise. They are a permanent increase that will gradually boost the total Social Security income that individuals will receive over the course of their retirement,” said the report. “Without a COLA that adequately keeps pace with inflation, Social Security benefits purchase less and less over time, and that can create hardships especially as older Americans live longer lives in retirement.”
Retirees now get a monthly benefit of about $1,656, but the possible COLA adjustment would increase that sum by about $144.10, the Senior Citizens League estimated in its report.
Taxes
But the relatively high COLA could also place some retirees over an income threshold that forces them to pay income taxes.
Mary Johnson, with the Senior Citizens League, told Fox News in July that “there can be some very long-term effects to high inflation COLAs,” adding, “It’s like a no-win situation.”
Higher monthly Social Security payments can also reduce senior citizens’ ability to obtain low-income programs such as the Supplemental Nutrition Assistance Program, or food stamps, Johnson told the outlet. They also might be disqualified from adjusted Medicare health and prescription drug benefits for low-income individuals, she said.
“These are income-based programs,” Johnson told USA Today. “Most, if not all of them, are easily administered through the states. If we’re forecasting a COLA that’s close to 9 or 10 percent, yes of course that’s going to affect, not only your eligibility for low-income benefits, it’s going to for everyone else, for people who don’t get benefits.”
There are “tens of thousands” of retirees, she said, who haven’t ever paid taxes on their Social Security benefits and may have to start doing so for their upcoming taxes due to the pending COLA increase.
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